which way to go

[Grego]

I am looking at buying an IP for approx $200k.
Present limit available on LOC is $150K
Problem is my self employed taxable income last Fin year was less than $10k thanks to my accountant.
A broker has told me of a new product available thru Macquarie.
Its a lo/no doc loan which has an initial higher interest rate in the first three years ( I think ) which gradually reduces to a normal variable rate over the 3 years.
Do I go for the max amount available to me on the Lo doc loan and take the balance from my LOC or do i do the opposite and take the majority from my LOC ( as it is a better interest rate) and just use the lo doc to make up the balance?? Or none of the above, or some variation on the above?
Should I preserve as much as possible of the LOC for the next opportunity and try and get the Income a bit higher?
The fact that the property is net cash flow positive ( Retirement villa), should this not carry some weight as far as what loan products are available to me?
Thanks
Grego

 

[Rolf Latham]

Hi Grego

You may qualify for a Suncorp Lo Doc Product which carries NO premium at all, with rates from 6.12 I remember. Ask your broker about it.

If thats no good then Id always go for the max loan on the no docs, say 80 % and preserve my available equity for the next deal. This is of course assuming that you will or want to have have a next deal.

The type of security offered is irrelevant in the positive. By that I mean it doesnt matter if the thing makes 500 a week. If you are not financially competent it doesnt matter if the IP is neg geared or great pos cashflow, and thats the way the lender sees it.

Note the security on the negative may have an effect. Many lo doc products have restictive security types and locations

Ta

rolf

 

[Grego]

Thanks Rolf

I will look at Suncorp. Is there a catch to this type of product
Maybe low LVR or very conservative valuations?

>Note the security on the negative may have an effect. Many lo doc products have restictive security types and locations<

Above do you mean they mey not like certain securities ie: studios
or the retirement village type of product?

Thanks

Grego

 

[Rolf Latham]

Hi Grego

LVRs are 75 IO or 80 % P&I for standard security.

They dont like some regionals, multiple dwellings on one title, inner city apptments and some studios etc etc.

Worth a bo peep, nothing to lose.

Additionally ING and Adelaide do a product similar to MAQ with a premium for only 2 years.

Vision Lending will do 6.65 at 80 % if security sits, though upfront fees are stiff

Ta

rolf